Allwin Pharma Ltd. is exploring the feasibility of acquiring Bhagwan Biotech Ltd. The latter company is specialized in developing products for major pharmaceutical companies spread over across India. During the first yea

Allwin Pharma Ltd. is exploring the feasibility of acquiring Bhagwan Biotech Ltd. The latter company is specialized in developing products for major pharmaceutical companies spread over across India. During the first year of the forecast period, product development costs are anticipated to generate negative cash flow of ₹15 lakh. However, during the second to fifth year, it is estimated that positive cash flows of ₹10 lakh, ₹12 lakh, ₹15 lakh and ₹20 lakh respectively would be generated. Considering intense competition in the field, it is anticipated that the cash flows are expected to grow modestly at 5% beyond the fifth year. The discount rate for the first five years is expected at 12%. While it would drop 8% after the fifth year. Compute value of the firm. (Note: The Present Value Factor at 12% for first year is 0.8929, for second year is 0.7972, for third year is 0.7118, for fourth year is 0.6355, for fifth year is 0.5674) Note: Present calculations upto 2 decimals.